On the political economy of financial reform

Yongfu Huang

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: This paper studies what induces governments to undertake reforms aimed at financial development. Its starting point is Abiad and Mody (AER 95(1), 2005). Rather than their ordered logit technique, it uses a within groups approach allowing for error dependence across countries and over time. This paper finds that policy change in a country is negatively rather than positively associated with its liberalization level, while the regional liberalization gap does not appear relevant. On the effects of shocks and crises, it suggests that some of the Abiad and Mody (2005) findings are robust, but others are fragile. Furthermore, it claims that the extent of democracy is important for this analysis, and identifes a negative effect of the extent of democracy on policy reform.

Keywords: Financial liberalization; Financial reform; Political economy; Cross country dependence (search for similar items in EconPapers)
JEL-codes: D72 F36 G18 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2006-06
New Economics Papers: this item is included in nep-fin, nep-fmk and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:06/586

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